Concerns about inflation have grown in recent months as federal stimulus payments have increased the ability of consumers to spend more than they have been doing since long before the recession caused by COVID-19. This was compounded by the difficulties of low-wage industries in attracting workers, which forced them to raise the wages of hundreds of thousands of workers.
But just as the pandemic has driven up the prices of some items, it has caused the prices of other items to drop. The price of “food at employee sites and schools” has fallen the most, probably because many people are now working from home and schools are not yet operating at full capacity. On another side, the price of this household item is skyrocketing.
Click here to see the prices of household items that have fallen the most since last year
Consumer spending isn’t the only reason the fear of inflation was rekindled for the first time since before the Great Recession. Fuel prices rose during the year, with the price of oil rising sharply. House prices have risen at an unprecedented rate, in part because of low mortgage rates.
Can the government use traditional measures to contain the prices of many items that make up the consumer price index, even after their recent increase? The Federal Reserve has set relatively low interest rates since the Great Recession to help stimulate the economy. But with the recent COVID-19 recession and rising inflation, the Fed may be running out of ways to influence price hikes. If the Fed raises rates to fight inflation, for example, it could put a damper on the economy already hit by the pandemic.
Once a month, the Bureau of Labor Statistics provides the Consumer Price Index, the most carefully tracked set of data on monthly price changes. The numbers are divided into dozens of individual categories. The most recent the outing was for August. The numbers are compared to the previous month and the same month a year ago.
In August, the CPI of urban consumers rose 5.3% from the same month last year. The price of some articles increased by double digits. Among them, beef and veal rose 12.2%, fuel oil by 28.6%, women’s clothing by 11.9% and used car prices by 31.9%. The price of education has also gone up, and not just during the pandemic. It is the cost of university the year you were born.
Although inflation has become part of the economic landscape this year, the prices of some items fell in August, and several fell very sharply. A review of the list indicates that the price cuts were in part due to the pandemic.
Food at employee sites and schools fell 42.5%. This may be due to a drop in student attendance due to the virus and summer vacation. Food prices on employee sites have likely been affected due to the work-from-home mandate in most businesses. The price of telephone equipment and calculators, both often used in offices, fell by 15%. The price of sewing machines and fabric fell 10.8%.